Securities Lawyer Blog | Victim of Fraud?

TAG | high-risk private placements

May/13

20

vFinance of Boca Raton Sanctioned by FINRA

Comments off · Posted by Securities Lawyer in FINRA

The following information appeared on FINRA’s website under “Disciplinary and Other FINRA Actions, May, 2013.”

vFinance Investments, Inc. (CRD #44962, Boca Raton, Florida)

consented to the described sanctions and to the entry of findings that it acted as the private placement agent for a placement of up to $5 million in convertible notes a company issued. Investors, some of whom were the firm’s customers, invested a total of $5,950,000 in the private placement while the issuer was on the firm’s restricted list for the duration of its participation in the offering.

FINRA’s findings stated that the firm did not adequately supervise the purchases of stocks on the restricted list even though the firm’s procedures required it to monitor purchases of securities of issuers on its restricted list, including those for which it was conducting offerings.

The firm failed to adequately enforce the procedures and instead authorized customer purchases of the stock without
conducting an adequate inquiry into the facts and circumstances surrounding those purchases, thereby failing to reasonably supervise activity in the issuer’s stock in a manner reasonably designed to achieve compliance with Regulation M. The findings also stated that the firm failed to disclose involvement of a statutorily disqualified person who worked closely with firm employees in connection with the private placement, communicating directly with the firm’s investment banking department and others.

FINRA’s findings also included that a registered representative involved in the solicitation of purchases of the stock used his personal email account to solicit purchases of stock and for other business purposes, and forwarded and addressed some of the emails to firm email addresses of other firm employees, including managerial-level employees. The firm should have been on heightened awareness of its obligations to supervise the use of external email accounts.

FINRA found that the firm did not create and implement procedures reasonably designed to review incoming and outgoing
securities-related and investment banking-related correspondence, including electronic correspondence, so it did not adequately supervise employees’ outside email accounts.
(FINRA Case #200901616000)

The following information was obtained on FINRA’s BrokerCheck:

Main Office Location:
1200 N. FEDERAL HIGHWAY
SUITE 400
BOCA RATON, FL 33432
Regulated by FINRA Florida Office

Mailing Address:
1001 FOURTH AVENUE
SUITE 3750
SEATTLE, WA 98154

This ends the information from FINRA’s website.

Soreide Law Group, PLLC, represents clients nationwide before FINRA. Call for a free consultation with on how to potentially recover your losses. To speak with an attorney call 888-760-6552

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Feb/13

12

DID YOU PURCHASE THESE REITS?

Comments off · Posted by Securities Lawyer in FINRA

Last week LPL Financial Holdings agreed to pay $2.5 million in fines and restitution for improperly supervising brokers who sold non-traded real estate investment trusts. (Please note that LPL neither admitted nor denied wrongdoing.) These non-traded REITs are high-yielding and very popular. These non-traded REITs have jumped about 50% since 2009, to $65 billion. They are difficult to track and value, since they don’t trade on public exchanges.
Below is a list of REITs, some of which LPL Financial Holdings were fined for allegedly selling with improper supervision to clients who were not interested in taking the risks with their conservative portfolios.

American Realty Capital Daily Net Asset Value, Inc.
American Realty Capital Global Trust, Inc.
ARC Retail Centers of America
American Realty Capital Trust IV, Inc.
ARC Healthcare Trust
American Realty Capital Phillips Edison
Shopping Center REIT
American Realty Capital Trust, Inc. Update
American Realty Capital New York Recovery REIT
ARC Property Trust, Inc.
Arciterra National REIT, LP
Behringer Harvard Multifamily REIT II, Inc.
Bluerock Enhanced Multifamily Trust, Inc.
Carter Validus Mission Critical REIT
Clearwater Opportunity REIT
CNL Global Growth Trust, Inc.
CNL Global Income Trust, Inc.
Cornerstone Core Properties REIT, Inc.
Hines Global REIT, Inc. 2012
Inland Real Estate Income Trust, Inc.
Inland Diversified REIT
Lightstone Value Plus REIT II Update
NetREIT Dubose Model Home REIT, Inc.
NetREIT $200,000,000 Stock Offering Update
O’Donnell Strategic Industrial REIT, Inc.
Preferred Apartment Communities, Inc.
RREEF Property Trust, Inc.
UCM US RMBS Opportunity REIT, Inc.
US Apartment Investors 2010, Inc.
Wells Core Office Income REIT

If you purchased these or other REITs, and sustained investment losses due to your stock broker or financial advisor’s recommendations, call Soreide Law Group, PLLC, for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website and complete our online form at: http://www.securitieslawyer.com.

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Feb/13

12

LPL REIT INVESTORS WARNING!!!!

Comments off · Posted by Securities Lawyer in FINRA

In an article in the Wall Street Journal, Feb. 11, 2013, Matthew Heimer writes that ever since the Federal Reserve started pushing interest rates to new lows, it’s been a common theme for retirees and other conservative investors accepting more risk to get a decent income from their portfolios. Last week LPL Financial Holdings agreed with state regulators to pay $2.5 million in fines and restitution for improperly supervising brokers who sold non-traded real estate investment trusts. (LPL neither admitted nor denied wrongdoing.) Non-traded REITs are high-yielding and popular – assets invested in the product have jumped about 50% since 2009, to $65 billion. But they’re for investors to track and value, since they don’t trade on public exchanges.

As Nathaniel Popper reports this week in the New York Times, opaque investments are becoming increasingly popular with less-sophisticated investors, leaving the investors overexposed to risks they don’t understand or vulnerable to fraud. The Financial Industry Regulatory Authority (FINRA) recently issued a notice expressing concern about products like these that could prove “potentially unsuitable and otherwise problematic for retail investors.” Other investments on FINRA’s list include business development companies, which invest in the debt of small privately held businesses, and private placement securities, which represent direct investments in such firms.

If you sustained investment losses due to your stock broker or financial advisor’s recommendations regarding non-traded REITs, private placements, or other complex products, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website and complete our online form at: http://www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Feb/13

11

FINRA Filings from Conservative Investors Who Were Sold Complex Products is on the Rise

Comments off · Posted by Securities Lawyer in FINRA

Financial regulators are confronting investor frauds that are giving retirement savers steep losses on complex products that until a few years ago were aimed only at the most sophisticated investors, writes Nathaniel Popper in a New York Times article from Feb. 11, 2013.

These victims are among the millions of Americans whose mutual funds and stock portfolios fell in the financial crisis, and who started searching for ways to make better returns. Many investors put money into speculative bets promoted by aggressive financial advisers. These investments included private loans to young companies and shares in bundles of commercial real estate properties.

“Since the crisis, we’ve seen more and more people reaching out into different types of exotic investments that are a big concern to us,” said William F. Galvin, the Massachusetts secretary of the commonwealth.

Wednesday, Feb. 6th., 2013, Mr. Galvin’s office ordered one of the nation’s largest brokerage firms, LPL Financial, to pay $2.5 million for improperly selling the real estate bundles, known as nontraded REITs, or real estate investment trusts, to hundreds of Massachusetts residents from 2006 to 2009, in some cases overloading clients’ accounts with them.

J. Bradley Bennett, chief of enforcement at the Financial Industry Regulatory Authority, or FINRA, said that for the last two years, 10 staff members have looked at the “proliferation of these products, to understand how they are being sold.”

“It’s got our attention,” he said. “We recognize the trends.”

Brokers are eager to sell these investments because they often bring in higher commissions. Several of these products hold out the promise of higher returns. Many of the investors in these complex products have filed claims with FINRA.

Private placements have been on the list of top enforcement concerns published by the national organization of state securities regulators every year since 2007. The private placements are supposed to be available only to wealthy, sophisticated investors, but several loopholes have allowed them to end up in the portfolios of less sophisticated retirement savers.

REITs have been one of the most heavily sold products. The new version, nontraded — the type that got LPL Financial in trouble in Massachusetts — can be bought and sold only in private transactions.

The outstanding amount of such nontraded REITs grew to $65 billion last year, from $43 billion in 2009. FINRA also issued a $14 million fine in October against David Lerner Associates, a large purveyor of nontraded REITs in the New York area.

If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations regarding non-traded REITs, private placements, or other complex products, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website and complete our online form at: http://www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Jan/13

13

Did You Invest With Beverly Hills Broker Bambi Holzer?

Comments off · Posted by Securities Lawyer in FINRA

Soeide Law Group is currently investigating broker, Bambi I. Holzer, CRD #1088028. Ms. Holzer is currently a registered representative with Newport Coast Securities of Beverly Hills, CA. There have allegedly been numerous (over 50) reports filed against her in her 25+ year career, and over $11 million in awards and settlements. Several of these complaints have been regarding the improper sale of private placements, and the sale of variable annuities, another high-risk product that is now under heavy scrutiny from federal regulators.

She was previously employed by these Beverly Hills, CA, brokerages: Wedbush Morgan Securities, Sequoia Equities Securities Corp., and Brookstreet Securities Corp.

If you feel you may have a claim against Bambi Holzer call 888-760-6552.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, represents clients nationwide before FINRA. If you or a loved one have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. Visit our website at: http://www.securitieslawyer.com.

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Jan/13

8

New FINRA Rule 5123 Regarding the Sale of Private Placements Became Effective December 3, 2012

Comments off · Posted by Securities Lawyer in FINRA

In an effort to protect investors over the sale of private placements, the new Financial Industry Regulatory Authority (FINRA), Rule 5123, was effective on December 3, 2012. Under the new FINRA Rule 5123, FINRA member firms that sell an issuer’s securities in a private placement will be required, subject to certain exemptions (which include private offerings to most types of institutional investors), to:
•file with FINRA a copy of any offering documents used to sell the private placement, such as private placement memoranda, term sheets or other offering documents or
•indicate that no offering documents were used.

Member firms must make this filing within 15 days from the date the firm makes the first sale of securities in private placements. New FINRA Rule 5123 also requires that firms file any amended versions of offering documents originally filed.

The new FINRA Rule 5123 will be limited primarily to private placements involving individual accredited and non-accredited investors who are not exempt from the Rule’s filing requirements.

Each member firm that participates as a placement agent in the offering is responsible for filing under new FINRA Rule 5123, but one member firm may be designated to file on behalf of the other participating member firms as long as all participating member firms are listed in the FINRA filing. Each firm relying on a designated filer should receive confirmation of the filing from the designated filer to satisfy its own filing obligation. Also, exemptions are applied on a firm-by-firm basis. Firms must electronically file the requisite offering documents in searchable PDF format with FINRA through the Private Placement Filing System on the FINRA Firm Gateway.

Available Exemptions

The new FINRA Rule 5123 includes private placement offerings solely to one or more of the following purchasers:

•Institutional accounts
•Qualified purchasers
•Qualified institutional buyers
•Investment companies
•An entity composed exclusively of qualified institutional buyers
•Banks
•Employees and affiliates of the issuer
•Knowledgeable employees
•Eligible contract participants and
•Institutional accredited investors

Other private placements that are exempt from filing under new FINRA Rule 5123 include, offerings of exempt securities, Rule 144A and Regulation S offerings, and offerings of interests in commodity pools operated by a registered commodity pool operator. New FINRA Rule 5123 will, in practice, be limited primarily to private placements involving individual accredited and non-accredited investors, who are not exempt from the Rule’s filing requirements.

New FINRA Rule 5123 became effective on December 3, 2012, and applies only prospectively to private placements that begin selling efforts on or after that date.

Under Rule 5122, FINRA outlines standards on disclosure, use of proceeds and filing requirements for private placements of securities issued by member firms themselves, rather than sales of securities by other issuers. Also effective December 3, 2012, firms must submit filings regarding member firm private offerings, as required by FINRA Rule 5122, through the FINRA Firm Gateway.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, represents clients nationwide before FINRA. If you or a loved one have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. Visit our website at: http://www.securitieslawyer.com.

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Jan/13

8

Did You Invest in Private Placement Funds with Gramercy Securities?

Comments off · Posted by Securities Lawyer in FINRA

Securities Lawyer, Lars Soreide, of Soreide Law Group, is currently investigating Gramercy Securities, Inc. This brokerage has been alleged to have placed unsophisticated investors’ money into unsuitable investments. There have been claims, for example, of a recent widow losing her entire net worth by investing in risky private placements. Some of these risky private placements were in the Inland American Real Estate Investment Trust, LaeRoc Edge Funds, and Arciterra Whitefish Opportunity Fund.

LaeRoc funds are real estate private placements. LaeRoc Partners is a real estate investment firm managing over $650 million in assets. The LaeRoc private placement was promoted by brokers as a safe or conservative investment. These representations allegedly were misleading.

Soreide Law Group, PLLC, represents clients nationwide. Call for a free consultation on how to potentially recover your private placement financial losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Dec/12

5

Did You Purchase Cyprus Equipment Fund Private Placements?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group securities attorney, Lars Soreide, is currently investigating Cyprus Equipment Fund 14, LLC. If your broker sold you this private placement, and you experienced financial losses, we would like to speak to you.

The following are the other Cyprus Equiment Funds:

Cypress Equipment Fund VII
Cypress Equipment Fund VIII
Cypress Equipment Fund IX
Cypress Equipment Fund X
Cypress Equipment Fund XI
Cypress Equipment Fund XII
Cypress Equipment Fund 13
Cypress Equipment Fund 14
Cypress Equipment Fund 15
Cypress Equipment Fund 16
Cypress Equipment Fund 17
Cypress Growth Fund

Cypress Financial Corporation is based in San Francisco and is an equipment leasing company. Cypress offers “private placements” to the public, which are then sold by FINRA registered broker/dealers.

Soreide Law Group, PLLC, represents clients nationwide. Call for a free consultation on how to potentially recover your private placement financial losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Nov/12

6

Did You Invest in These Oil and Gas Funds?

Comments off · Posted by Securities Lawyer in FINRA

Did you invest in Mountain V Oil and Gas, or Ridgewood Energy Funds I through Z?

Typically, investing in an oil and gas deals or limited partnerships can be a speculative venture that may have the risks associated with illiquid investments. When making investments in oil and gas deals or energy limited partnerships, we highly recommend caution.

Mountain V Oil & Gas, Inc., with it’s headquarters in Bridgeport, West Virginia, was founded in 1994 by Steve and Mike Shaver to obtain oil and gas reserves in the Appalachian Basin.

Ridgewood Energy Funds, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, X, Y and Z, were limited partnership deals that may not have produced returns in excess of the client’s original investment. Now, the investors in Ridgewood Energy Funds, have illiquid limited partnership interests that may not be producing the income they were promised by their broker/financial advisor.

Investors in these oil and gas funds who have suffered financial losses may potentially be able to recover their losses through a FINRA arbitration.

Oil and gas funds typically are sold through private placement securities offerings. These investments can be risky and not suitable for the portfolios of the conservative investor.

If you or a family member have sustained losses in any of these oil and gas investments due to your stock broker or financial advisor’s recommendation, call 888-760-6552, or visit http://www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Nov/12

1

Attorney Lars Soreide of Soreide Law Group files FINRA actions against Ellen Erenstein formerly registered with Investors Capital for selling Tenant in Common Investments and other High Risk Private Placements

Comments off · Posted by Securities Lawyer in FINRA

Attorney Lars Soreide, of Soreide Law Group, has filed a FINRA arbitration against Ellen Erenstein, and Investors Capital, for the sale of Tenants In Common (TIC) real estate investments and other high risk private placements.
The TIC’S and alternative investments sold to Soreide Law Group’s client that Ms. Erenstein recommended, have not performed well and are illiquid. Investors who have invested in these TICs have lost a majority if not all of their investments. Ms. Erenstein often touted the tax benefits and safety of TIC investments without adequately disclosing the level of risk.

It is alleged in the FINRA action that the TICs and private placement investments were inappropriate due to the investor’s age, financial situation and sophistication.

Investors in Charlestowne, LLC, Commonwealth Capital Corp.’s Income and Growth Fund V, Icon Leasing Fund Eleven, Shoreview Corporate Center, and Doral Court TICs, have retained Soreide Law Group to recover their losses.

If you invested in a TIC or other private placement investments through Ellen Erenstein formerly of Investors Capital Corp. and believe you were misled, call (888) 760-6552.

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